Sales of Existing Homes Surge to a Record High
Sales of previously owned homes in the U.S. climbed to a record high in November as low interest rates and a rising economy kept pulling buyers into the market.
Existing-home sales rose 13.2% from a year earlier to a 6.94-million annual rate, the National Assn. of Realtors reported Wednesday. The previous high was 6.92 million in June. Buyers paid more too: The median price rose 10.4% to $188,200.
November sales in the West increased 16.6%, the most of any region. Every region showed gains year over year, although sales in the Northeast slipped 1.3% from October to November.
Some recent reports stirred concern that the hot housing market might be slowing, both nationally and in California. Last week, the Commerce Department said November new-home sales fell 12% from a robust October. The decline was sharpest in the West at 28%.
But new-home sales -- which account for about 15% of the market -- are on track to set another record this year at 1.2 million units nationwide. And Wednesday’s report on existing-home sales provided fresh evidence that the housing market is still roaring.
“If you thought the housing market was beginning to soften, think again,†said Joel Naroff, president of Naroff Economic Advisors.
Several factors are keeping the market bubbling, including low mortgage rates.
“Mortgage interest rates dropped a quarter of a percentage point in late summer and then stabilized,†said David Lereah, chief economist for the Washington-based real estate trade group. “Coupled with a growing labor market and a rising economy, this created optimal conditions for the housing sector.â€
Fixed 30-year mortgage rates averaged 5.72% last week, up from 5.69% the previous week, the Mortgage Bankers Assn. said Wednesday. That helped send mortgage application activity down 1.7%.
Mortgage rates are still relatively low on a historical basis and are at the same level as a year ago. When they finally start a widely predicted rise, the market will slow, said Keitaro Matsuda, senior economist at Union Bank of California, but for now “it seems to be relatively healthy, going strong.â€
Indeed, California “is one of the hottest housing markets in the country,†said Leslie Appleton-Young, chief economist for the California Assn. of Realtors. “It’s exceeded all expectations.â€
Even so, she expects sales of new and existing homes in California to fall 2.5% next year, in part because of a continued climb in prices, which she think will jump 15% in 2005.
Rising prices are finally driving would-be buyers out of the hunt, especially in affluent markets such as Ventura and Orange counties, where prices are leveling off and the number of sales is declining, said Delores Conway, a professor at the USC Lusk Center for Real Estate.
“There are fewer people who can afford at the high end because prices have roughly doubled over the past three years,†she said.
A series of mortgage rate reductions starting in 2000 kept buyers in the market for ever-more-expensive houses. Now that rates have leveled off, price increases are putting houses out of reach for many, Conway said.
New housing units in California as measured by building permits issued totaled 17,460 for November, up 2.5% from October and 31.4% from November 2003, the California Building Industry Assn. said Wednesday. Of that total, 10,922 units were single-family homes, and 6,538 units were apartments or condominiums.
California housing starts will total 210,000 units this year, up 7.3% from 2003, the association said.
Times wire services were used in compiling this report.
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